Will the mortgage industry continue to boom in 2018?

PUBLISHED: 17:31 19 January 2018 | UPDATED: 17:31 19 January 2018

How easy will it be to get a mortgage in 2018?

How easy will it be to get a mortgage in 2018?


Buy now as house prices will rise, advises Keith Hood of Warners Financial Services

Keith Hood, Warners Financial ServicesKeith Hood, Warners Financial Services

At the beginning of a new year its traditional to reflect on the past year’s performance.

Personally I’ve played a blinder, no surprise there, I here you say, but what about the business? Well that was also good news. Despite a small interest rate rise, worries about the impact of Brexit and the decline of the buy-to-let market, the mortgage business continued to boom in 2017. Although a lot of this was remortgage business, the property market faired pretty well.

According to the property website Zoopla, house prices in Norfolk rose 4.75 per cent and was one of the most buoyant areas in the UK. Transaction numbers are more interesting perhaps for estate agents and mortgage brokers and again this was good news particularly in the second half of the year when compared to 2016. The increases are still nowhere near enough. however, when you consider our national housing shortage.

The beginning of the year is also the time to forecast and plan for the year ahead.

In last year’s January column I predicted a small rate rise, modest property price inflation, a slow down in the buy-to-let market and a boom in the remortgage market, uncannily accurate as always. So whilst I’m on a roll, let me tell you my thoughts for 2018.

I predict a further small increase in mortgage rates fuelled by rising inflation, although this may be tempered by a small recovery in the value of the pound. House prices will continue to rise but at slightly lower rate, fuelled by the housing shortage and removal of stamp duty for first time buyers. Transaction numbers will remain fairly stable but again the first time buyer sector growing following the removal of stamp duty for them on property up to £500,000, which in practice is pretty much all first time buyers.

Mortgage lenders will, I think, also become more inventive. There is already some evidence of this with some clever twists being introduced by the newer lenders, such as allowing parents to be included on a mortgage application but not being actual owners of the property. This avoids a stamp duty charge for parents who are simply appearing on the mortgage application to help their offspring who may, for example, be self employed without sufficient accounts for a lender.

A first time buyer asked me this week if they should buy now or wait for a year until they had saved a bigger deposit, which would mean that they would get a better mortgage rate, a question I get asked regularly. They were paying a significant amount of rent each month, around £800. My view is that it’s probably better to buy now as if house prices continue to rise, as I expect they will, then the benefit of the extra savings would be wiped out by having to pay a higher price for the house and a further year’s rent will also have been paid. So although house prices may seem high I cant see a fall in prices anytime soon. So my advice was to buy sooner rather than later.

You can contact Keith Hood, managing director at Warners Financial Services on 01953 607313 or visit www.warnerfs.co.uk

Warners Financial Services sponsor this column.

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